Capicua (CIC) has been implicated in pathogenesis of spinocerebellar ataxia type 1 and cancer in mammals; however; the in vivo physiological functions of CIC remain largely unknown. Here we show that Cic hypomorphic (Cic-L-/-) mice have impaired bile acid (BA) homeostasis associated with induction of proinflammatory cytokines. We discovered that several drug metabolism and BA transporter genes were down-regulated in Cic-L-/- liver; and that BA was increased in the liver and serum whereas bile was decreased within the gallbladder of Cic-L-/- mice. We also found that levels of proinflammatory cytokine genes were up-regulated in Cic-L-/- liver. Consistent with this finding; levels of hepatic transcriptional regulators; such as hepatic nuclear factor 1 alpha (HNF1α); CCAAT/enhancer-binding protein beta (C/EBPβ); forkhead box protein A2 (FOXA2); and retinoid X receptor alpha (RXRα); were markedly decreased in Cic-L-/- mice. Moreover; induction of tumor necrosis factor alpha (Tnfα) expression and decrease in the levels of FOXA2; C/EBPβ; and RXRα were found in Cic-L-/- liver before BA was accumulated; suggesting that inflammation might be the cause for the cholestasis in Cic-L-/- mice. Our findings indicate that CIC is a critical regulator of BA homeostasis; and that its dysfunction might be associated with chronic liver disease and metabolic disorders.